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Should You Refinance?


There are several reasons that might make someone consider refinancing their existing mortgage. One would be to get a lower interest rate than what they currently have, thereby reducing monthly payments and lowering the overall cost of the mortgage. Another is to shorten the length of the loan, which can save quite a bit in interest payments. Thirdly, someone may have other debts that they wish to pay off, and refinancing may provide them a means of consolidating that debt into one overall lower payment.

A lower interest rate isn't the only thing that should be taken into account when thinking about refinancing. There are costs and fees associated with refinancing your mortgage. The bank will charge fees, there will be costs for a new inspection and a new appraisal, title search, and so on. The process that is gone through is very much like the process that one goes through on getting a first mortgage. It requires a new application with a new credit check, survey, and sometimes an appraisal. As it is with a first mortgage, this can be a long and costly process.

In general, it makes sense to refinance if the interest rate on the new loan is at least two percentage points lower than that of the current loan, although this is not always the case. Some things that need to be taken into consideration are the total cost of the refinancing, the total monthly savings, and how long you plan to stay in your house after you refinance. You can calculate how long it will take you to break even on refinancing costs by dividing the total cost of the refinance by the monthly amount you will be saving. For example, if the cost is $2,500, and you reduce your monthly payments by $100, then it will take 25 months to start seeing the savings from the reduced mortgage rate. If you plan on staying in your house longer than this, then it may just make sense for you.

Another reason that someone might consider refinancing is if they are trying to consolidate debt. In such cases, there is also the tax impact that one should look at. Many loan types are not tax deductible, whereas mortgage loans are. Therefore for that reason alone it may be a good idea to consolidate outstanding credit card debt, student loans, car loans, as well as others.

Some people may not have a choice about refinancing, it is a must for them. This happens in cases where they have a loan with a balloon payment coming up and no conversion option. In instances like this the best bet is to refinance the mortgage a few months before the balloon payment is due.

If you do decide that the costs associated with doing a refinance outweigh the benefits, you should ask your bank or financial institution if you can get some of the terms that you want by agreeing to a modification of your current loan. However you choose to go, remember that it always makes sense to consult with a mortgage professional before making your move. This can end up saving you both time and money. You should also do research before making a decision. Spend some time on the web familiarizing yourself with what you are getting yourself into. Take the time to read up on and understand what your options are.

More on Mortgage Refinancing.

Michael VanDeMar




MORE RESOURCES:

Neon Tommy

Obama pressures Congress on mortgage refinance program
Fox News
WASHINGTON – President Obama is rallying support for his plan to expand government assistance to homeowners, pressuring Congress to help lower lending rates for millions of strapped homeowners. Obama, in his radio and Internet address Saturday, ...
Mixed reviews for President Obama's housing planCBS Moneywatch
Obama Announces Mortgage Refinance PlanNeon Tommy
Cardoza applauds Obama's new housing initiative, says will help ValleyMerced Sun-Star
Speaking of Real Estate (blog)
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MonitorBankRates.com

Mortgage Refinance Rates: 15 Year Refinance Mortgage Rates at 3.29%
MonitorBankRates.com
Mortgage refinance rates on 30 year conforming home loans are averaging 3.98%, unchanged from yesterday's average 30 year mortgage refinance rate. Mortgage refinance rates today on 15 year home mortgage loans are averaging 3.29%, down from yesterday's ...

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International Business Times

Obama Proposes Mortgage-Refinance Plan
Wall Street Journal
By NICK TIMIRAOS President Barack Obama called on Congress during Tuesday's State of the Union address to approve new legislation that would give all homeowners who are current on their mortgages the opportunity to refinance at record low mortgage ...
Will Obama's Mortgage Refinance Plan Be D.O.A.?U.S. News & World Report
Obama proposes mortgage refinance programPolitico (blog)
Obama State of the Union 2012: Mortgage Refinance Changes Face ObstaclesInternational Business Times
Housing Wire -Daily Caller -MyFox Los Angeles
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Housing Wire

President Obama's Mortgage Refinance Plan Just a Bid for Votes
Yahoo! Contributors Network
By Mark Wise By Mark Wise | Yahoo! Contributor Network – 12 hrs ago This story comes from the Yahoo! Contributor Network, where individuals publish their unique perspectives on some of the world's most popular websites.
New Obama mortgage refinance plan to near $10 billionHousing Wire
Obama to Announce New FHA Mortgage Refinance ProgramGo Banking Rates
Obama Housing Proposals Face Uphill Battle In CongressMNI News
MarketWatch
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Obama Unveils Mortgage Refinance Endeavors
Mortgageorb
by MortgageOrb.com on Wednesday 01 February 2012 The Obama administration has presented the mortgage refinancing plan that was first announced during the president's State of the Union speech on Jan. 24. According to a statement released by the White ...

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Living large? Get the best rate on your jumbo mortgage refinance
NASDAQ
If you buy apparel from "big and tall" clothing stores, you're used to paying more and having less to choose from. "Regular guys," on the other hand, benefit from a wider selection of products and more competition between retailers.

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AgedLeadStore.com to Add 1100000 Aged Mortgage Refinance Leads
Middle East North Africa Financial Network
COM, January 26, 2012 ) Baltimore, MD AgedLeadStore.com is increasing its value for its customers by adding 1.1 million aged Mortgage Refinance Leads in February. This is important as many people depend upon their ability to refinance to make progress ...



$11.94M Refinance for Northeast RBS Citizens Bank Portfolio
Citybizlist Real Estate
Greg Nalbandian, Senior Vice President and Managing Director of NorthMarq Capital's New Jersey Regional office, has arranged a first mortgage refinance totaling $11.94 million for a RBS Citizens Bank Portfolio of 16 RBS Citizens Bank branches in New ...



Boehner On Refi Plan: Bad Idea, Obama!
Mortgageorb
by MortgageOrb.com on Thursday 02 February 2012 Any hope for bipartisan support of President Obama's mortgage refinance proposal was squashed by House Speaker John Boehner, who dismissed the new initiative as a continuation of failed policies.

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Two Harbors Investment Corp. Reports Fourth Quarter 2011 Financial Results
MarketWatch (press release)
... properties at attractive prices or lease such properties on a profitable basis, the impact of new or modified government mortgage refinance or principal reduction programs, and unanticipated changes in overall market and economic conditions.

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